Tips for Parents: Teach Kids About Money
Monday, February 13, 2006
MANHATTAN, Kan. - Saying "no" to a child in a public place can be difficult, but resisting the parental urge to give in and buy the impulse of the moment is important in teaching children about family finances and how to manage money, said Carol Young, Kansas State University Research and Extension family financial management specialist.
"If, for example, parents give in to a child's wants - or whims - the child may fail to learn the value in saving for a special item," she said.
"We're becoming a cash-less society - paychecks are direct-deposited and bills are paid by check or auto bill-pay programs," she said. "Children who see their parents pay with a check or credit card may think the pot of money is, magically, unending.
"Kids need to see how their parents handle the money process. Seeing a parent make a deposit or pay bills by check or on the computer is part of the learning process. Explain (briefly) what you're doing - and how it works: `I have to put money in my account so I can write a check next week.´ or `I'm depositing money in savings for our vacation.´"
To encourage children to save, Young advised giving the child the freedom to spend some of his or her money on things he or she chooses, right or wrong.
If a child has the proverbial piggy bank, open the bank occasionally and take advantage of the opportunity to talk - not preach - about money management, she said. Encourage the `save some, share some and then spend some´ philosophy and then let them do just that.
"Forcing a child to save all of his or her money may result in resentment or impulsive spending," said Young, who offered tips for parents to encourage children to save:
* Talk with the child about his or her wants or goals such as a new bicycle, summer camp or new electronic device.
* Encourage discussion and/or decision-making to determine the savings priority, which item is most important to the child.
* Explore with the child possible ways to save for a goal.
* Set aside some one-on-one time to check costs and compute the savings needed. For example, help the child divide his or her planned savings into the purchase price to compute the number of weeks it will take to reach their goal and make the purchase.
* If a big-ticket item, parents may want to offer a matching savings incentive.
* Celebrate when the goal is reached but also take time to set a new goal.
"Encouraging a child to make some charitable contributions can help a child learn compassion for others who have less and gratitude for what he or she has," Young said. "News reports about children selling lemonade to raise money for hurricane relief demonstrate that relatively young children can learn compassion and reach out to others.
"Everyone makes money mistakes, but learning to make mistakes early, perhaps with a few dollars, may spare a child from making more costly mistakes later in life," Young said.
For more information on money management, Kansans can contact the county or district K-State Research and Extension office or visit Extension's financial management Web site: www.oznet.ksu.edu/financialmanagement/.
Should you give your child an allowance?
"Giving children an allowance can help them learn how to manage money and evaluate discretionary spending," said Carol Young, Kansas State University Research and Extension family financial management specialist.
The amount of an allowance can vary with age, a child's maturity and family's financial position," said Young, who answered frequently-asked questions about allowances: Should parents tie responsibilities such as requiring a child to clean his or her room, set the table or fold laundry to an allowance?
"Maybe ... maybe not," said Young "Placing too many restrictions on the allowance can turn a learning opportunity into a family argument, resentment - or both. Saying that doesn't mean that children shouldn't participate in routine household chores and learn to be responsible for their own stuff, such as cleaning their room or doing their homework.
"It takes work and organization to maintain a household. Just being a member of the family has an expectation of sharing in that maintenance effort."
Should you pay children for chores? "Providing opportunities beyond daily chores to earn extra money - weeding the garden or raking the lawn, for example - ties buying power to effort," she said.
An allowance is basically discretionary income that can - and will - allow children to make money management mistakes. But, buying an overrated toy that soon disappoints often will cause a child to pause before spending in the future, Young said.